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Although today’s daily candlestick closed green, it made a lower high and a lower low (which is the definition of downwards movement). This was expected for the Elliott wave count.

The short term resistance line on the hourly chart neatly showed where upwards movement for the session ended.

Summary: Some downwards movement to find support at the lilac / purple trend line is expected, about 2,211. If this target is wrong, it may be a little too low. Use the trend line as a preference. Thereafter, the bull market should resume.

This bull market is strong and healthy. Use this correction as another opportunity to join the trend.

New updates to this analysis are in bold.

Last monthly and weekly charts are here. Last historic analysis video is here.


S&P 500 Daily 2017
Click chart to enlarge.

Intermediate wave (4) is exhibiting alternation with intermediate wave (2). Intermediate wave (2) is a double zigzag and intermediate wave (4) is an incomplete expanded flat.

Along the way up to the final target at 2,500 a more time consuming fourth wave correction for primary wave 4 would be expected for this wave count.

The purple trend line is the most important piece of technical analysis on all charts. Draw it carefully from prior all time highs of 2,134.28 on the 21st of May, 2015, to 2,193.81 on the 15th of August, 2016. Extend it out. Daily charts are on a semi log scale.

The correction for intermediate wave (4) should end if price comes down to touch the purple trend line.

Intermediate wave (4) may not move into intermediate wave (1) price territory below 2,193.81.

At this stage, intermediate wave (4) has lasted 19 sessions. It does not look like it can complete in just another two sessions to total a Fibonacci 21. The next Fibonacci number in the sequence is 34, which would now see intermediate wave (4) continue for 15 sessions, but this looks to be too long. Intermediate wave (4) may not exhibit a Fibonacci duration and may end now in about another five or so sessions.


S&P 500 hourly 2017
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If the target calculated is wrong, it may be too low. Price may find strong support just above the target at the purple trend line. This line is copied over carefully from daily and weekly charts, which are both on semi log scales. This hourly chart is on an arithmetic scale, meaning the line will sit slightly differently. Both should be watched carefully.

Minor wave C must complete as a five wave structure. It is extremely likely to make at least a slight new low below the end of minor wave A at 2,233.62 to avoid a truncation and a very rare running flat.

The tentative green resistance line has been tested now three times, so it has slightly better technical significance today. If price moves down at the start of tomorrow’s session, then some confidence may be had in this line.

This wave count now expects to see an increase in downwards momentum and an increase in volatility as a small third wave down unfolds over the next few days.



S&P 500 weekly 2017
Click chart to enlarge. Chart courtesy of

The last three complete weeks show lighter volume than the three weeks prior. This makes sense as a consolidation. Volume has an upwards bias and makes sense if the larger trend is still up.

On Balance Volume is still constrained below resistance and above support.

RSI is not extreme and still in bullish territory.

ADX indicates a new trend; it is above 15 and rising. The trend is up.


S&P 500 daily 2017
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Price came with declining volume as it rose to the last high. This last rise in price from 30th of December to the 6th of January was not supported by volume, so it is suspicious. This supports the Elliott wave count, which sees this last high as the end of a B wave. B waves should have internal weakness; they should look “wrong”.

At this stage, price is finding support about the short term Fibonacci 13 day moving average and the mid line of Bollinger Bands.

Today’s session completed a green daily candlestick with a long lower wick; this is slightly bullish. However, it made a lower low and a lower high, the definition of downwards movement, yet the balance of volume for the session was upwards.

A slight decline in volume for the day where the balance was upwards indicates a lack of support for the rise in price during the session. This may be read as slightly bearish.

Sideways movement has brought ADX down from extreme. ADX is declining, indicating a consolidation is unfolding.

ATR is overall flat, also indicating a consolidation is unfolding.

On Balance Volume has reached resistance today. This purple trend line has strong technical significance and may assist to halt any further rise in price here. A breach above this line would be a strong bullish signal tomorrow, which would put the Elliott wave count in doubt for the short term.

There is strong divergence at the last high between price and RSI, MACD and Stochastics. This supports the Elliott wave count, which sees the last high as the end of a B wave.

Bollinger Bands are very tightly contracted. Look out for an imminent return to volatility for this market. The Elliott wave count expects a small third wave down and it may move quickly.


VIX daily 2017
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There are a few instances of multi day divergence between price and inverted VIX noted here. Bearish divergence is blue. Bullish divergence is yellow. It appears so far that divergence between inverted VIX and price is mostly working to indicate short term movements spanning one or two days. While this seems to be working more often than not, it is not always working. As with everything in technical analysis, there is nothing that is certain. This is an exercise in probability.

VIX exhibits single day divergence with price today: inverted VIX moved higher while price made a lower low and lower high (the definition of downwards movement). So volatility declined as price moved lower, but this is opposite to the normal situation. However, not too much will be read into it as overall the balance of volume today was upwards and price moved mostly sideways. This divergence may be interpreted as bearish, but it will not be given much weight in this analysis.


AD Line daily 2017
Click chart to enlarge. Chart courtesy of

Short term bullish and bearish divergence is again working between price and the AD line to show the direction for the following one or two days.

There is another instance of short term divergence today between price and the AD line: the AD line today made a new all time high beyond the last high three sessions ago, but price has not made a corresponding new high. This is hidden bearish divergence and indicates weakness in price. It may be followed by one or two sessions of downwards movement.

I subscribe to Lowry’s On Demand service to keep a track of the health of the market in terms of market breadth. They conclude that this bull market is strong and healthy, and is likely to continue for at least three or four months, if not substantially longer.


The DJIA, DJT, S&P500 and Nasdaq have made new all time highs in December of 2016. This confirms a bull market continues.

This analysis is published @ 08:31 p.m. EST.